Reichhold $103.2 million DIP loan, bid procedures, stalking horse OK’d

By Kali Hays

New York, Dec. 4 – Reichhold Holdings US, Inc. received final approval on $103.2 million of debtor-in-possession financing and of bid procedures related to a proposed $31.46 million sale of substantially all company assets, according to separate Dec. 4 orders from the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Reichhold won interim access to $93.26 million of the DIP loan on Oct. 2.

The financing is comprised of a $53.2 million senior DIP loan and a $50 million junior DIP loan.

Cantor Fitzgerald Securities is the agent. The lenders are Third Avenue Management, JPMorgan, Black Diamond and possibly other holders of the company’s senior secured notes.

The interest rate will either be 12% or a paid-in-kind rate of 14%.

The facilities will mature on Feb. 27.

The order approving the bid procedures also approved Reichhold’s stalking horse agreement with Reichhold Acquisitions Holdings LLC with an offer totaling $31.46 million.

Reichhold Acquisitions is a wholly owned subsidiary of Reichhold Holdings International BV, which is also a DIP lender of the company.

According to the bid procedures motion, holders of senior secured notes due 2017 will become the owners of Reichhold Acquisitions as a result of a “consensual foreclosure” of the stock in Reichhold Industries, Inc., thereby removing the insider status of the stalking horse.

Reichhold Acquisitions’ offer includes a release of DIP obligations equal to $15 million, a payment equal to the difference between the sellers’ closing costs and wind-down expenses and retained cash capped at $2.46 million and the assumption of claim liabilities up to $14 million.

Under the stalking-horse agreement, Reichhold Acquisitions is not entitled to a breakup fee or expense reimbursement if it is not the successful bidder. It did not supply a deposit.

The stalking-horse bid will serve as the opening bid at an auction set to take place Jan. 8 if one or more qualified bids are received by Jan. 6.

A qualified bid must be at least $1 million over the stalking-horse bid and be accompanied by a 10% cash deposit and an agreement to close the transaction by Jan. 30.

Bids at auction must be made in minimum increments of $500,000.

A sale approval hearing is scheduled for Jan. 9.

Reichhold supplies resins for the industrial, transportation, construction, marine, consumer and graphic arts markets. It is based in Durham, N.C. The company filed for bankruptcy on Sept. 30 under Chapter 11 case number 14-12237.

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